May 30, 2022
Why we started Structure
6 min read
Structure has risen out of necessity and alleviating the pain we ourselves have felt as modern investors and traders trying to make it in a nauseatingly complicated marketplace. While there are many trading and investment platforms in the world, few to none are directly addressing the problems which they ostensibly exist to solve: most people are just looking for better ways of making more money. Plain and simple. Below are some of the problems that are getting in the way of this sensible goal and some of the ways we are addressing them at Structure.
- While pretty much everyone recognizes the importance of doing well financially, very few people have the time, attention, and education to make that happen. Because of this, we’re building Structure to be lightning fast to use; easy to look at and understand; and intuitive enough to make sense without any special prior knowledge.
- Even though huge wealth is being created in crypto and DeFi today, only a small number of people are benefiting because the educational and technological barriers to entry are very high. Because of this, we have designed Structure such that we can incorporate the newest, most cutting-edge investment opportunities in DeFi as soon as possible, thus opening them up to a much larger, general audience that has historically been missing out on such opportunities.
- The portion of a person’s portfolio value that is allocated into traditional assets (like stocks and bonds) currently cannot be put to work in the rapidly growing DeFi applications, such as yield farming. Additionally, these traditional assets are not convenient for most people since they cannot be transferred person-to-person, and they usually cannot be fractionalized, like money can. Consequently, these traditional assets have less utility value than they would if these disadvantages were eliminated. To address this problem, Structure tokenizes these traditional assets, thus enabling them with all of the conveniences and utility that we have come to know and love in crypto assets. In doing so, we are (i) unifying the investing experience across asset classes since they will all trade like tokens do; (ii) we are unlocking their massive value from legacy systems and making them accessible to DeFi applications; and (iii) we are making them more convenient for everyday use like money, thus unlocking more utility value.
- Most people don’t have a ton of savings or extra capital to invest, thus excluding them from a lot of investment opportunities that charge fixed fees to access. Thus it’s important a platform eliminate as many fixed fees as possible. Although they might be low in absolute terms, for some subset of people, fixed fees will significantly erode an investor’s returns in percentage terms, and this cannot be overlooked.
- If you’re from North America or Europe, you’re not going to really feel this, but in most places in the world access to global capital markets is really poor. Whether we like it or not, we live in an economy that is globalized, democratic-ish, and ceaselessly capitalistic. This is the game we’re all born into; but you cannot win at a game you’re excluded from playing. Thus, access to global capital markets for as many people in the world as possible is a necessary step towards seeing more equity in the world. Accordingly, Structure is being designed to work as well in the developing world as it is in the already-developed.
- The asset universe is diverse, as are the types of things people want to invest in; but no platforms offer access to everything, or even the 75% most-popular. Consequently, people’s attention and capital gets dispersed and fragmented across a handful of platforms, which ultimately takes away from their investing productivity. Because of this, the Structure team is doing everything it can to bring as many asset classes as it can all under one roof, so that the trading and investing experiences are as straightforward and unified as possible.
- You can’t trade traditional assets, like stocks and bonds, 24/7. This means that there are always some assets that you might otherwise like to invest in that trade in the middle of the night for you or when you are otherwise occupied with your regular job. This has the effect of narrowing the asset universe and giving you fewer good investment options. Thus, we have built Structure to allow trading of all asset classes 24/7, which is not an easy lift, but a meaningful and impactful improvement for many people around the world.
Why all this matters:
Structure is designed to democratize investing by reducing as many barriers to entry as possible for as many people as possible. But why does this matter? According to the World Bank, asset inequality is a much greater problem for economies than the more commonly discussed income inequality. It is a greater contributor to systemic poverty and social dysfunction and should be the target of government intervention. Yet, little to nothing is being done on this front by governments. A consideration of a few statistics makes the severity of the asset problem clear:
- In much of the world, land is the single greatest asset. Yet throughout Asia, Africa, and South America 10% of the population owns 55%-75% of the land. Further, women make up only 20% of those who do own land.
- Roughly 50% of US households have $0 in investment assets. Globally, the average is closer to 70%.
- $100 trillion dollars are under management globally generating trillions of dollars in income that goes almost exclusively to the already wealthy, further exacerbating income inequality and asset ownership imbalances.
Despite these immense disparities in asset ownership, most countries do not have laws explicitly prohibiting the average citizen from acquiring assets — though women face legal barriers to land ownership in many places. Rather, the barriers to investing are more systemic. Surprisingly, income is not the main challenge. Even in India, the median disposable income per household is estimated at around $2150, hence at least half the population would have the possibility of investing and holding assets. Bizarrely, in the United States where median household disposable income is $34,515, most US households have few or no investments and those they do hold are mostly in traditional assets that do not generate any income. So rather than money, it’s the systemic problems (that Structure is designed to address) that maintain these disparities: lack of access to markets, lack of education, high costs, complexity, and an often underlying sense that investing ‘is not for people like us’. And as the World Bank has pointed out, it is lack of assets that seems a more powerful contributor to poverty than lack of income — though of course they are related.
Given these numbers, if an investor were able to take $100 and turn it into $250, in much of the world this would be transformative. The world of DeFi and cryptocurrency is clearly an exciting new investing opportunity. The only question is: Who will benefit from this new world? Will it be the already wealthy; or will we take this opportunity to give as many people as possible the chance to create wealth? At Structure, we are doing everything we can to make the latter option a reality.
Believe in this mission? Consider joining the team: careers.structure.fi